Ex-Enron Exec Fastow Faces Fraud Charges

KRISTEN HAYS

Published 8:00 pm, Sunday, May 18, 2003

AP Business Writer

Former Enron Corp. finance chief Andrew Fastow pleaded innocent Monday to new charges expanding government allegations that he masterminded schemes that lined his pockets with millions and eventually fueled the energy company's failure.

Fastow, who was not required to appear in court and was represented by his attorneys, was arraigned on charges of insider trading, filing false tax forms and conspiracy to falsify books and records.

U.S. District Judge Kenneth Hoyt declined to schedule a trial, and set another status hearing for July 28 in hopes of getting a better handle on the scope of the case, which attorneys estimate will take four months or more to try.

Hoyt said Assistant U.S. Attorney Andrew Weissmann, who asked that Fastow's trial start by late October, may have been "a little optimistic on trying this case this fall, winter or early spring" next year.

Weissmann said prosecutors are ready to try Fastow and two defendants added to the case May 1: Ben Glisan Jr., a former Enron treasurer who earned a $1 million return on a $5,800 investment in one of Fastow's partnerships that did deals with Enron; and Dan Boyle, a former Enron finance executive allegedly involved in a 1999 sham deal to sell Nigerian barges so the company could appear to reach earnings targets. Both pleaded innocent.

Prosecutors indicated that continued delays increase the possibility of adding more charges or indicting more defendants.

John Keker, Fastow's attorney, said defense attorneys didn't expect to hear an "implied threat" of additional charges or new defendants if the judge declined to set a trial date. He said they expected Hoyt to plan for another status conference.

The new charges bring the counts against Fastow to nearly 100, with a maximum penalty of 1,142 years in prison and fines of up to $27.2 million. The original indictment unsealed Oct. 31 charged him with 78 counts of fraud, money laundering, conspiracy and obstruction of justice. He remains free on $5 million bond.

"Mr. Fastow says the number of charges add up to more than a millennium of time," Keker said Monday. "That's pretty complicated."

Fastow's lawyers declined comment outside of court, but have consistently said that Fastow was hired to arrange for off-balance-sheet financing that beautified Enron's books and that company leaders directed and praised his work.

The latest charges against Fastow include allegations that he knew Enron's financial health was a facade as he sold $18.1 million in stock from March to November 2000. They also allege he reported income of $61.1 million on tax forms over four years _ ranging from $1.2 million in 1997 to $48.5 million in 2000 _ when he earned more.

Charges of conspiracy to commit wire fraud, money laundering conspiracy and filing false tax forms were unveiled May 1 in a separate case against Fastow's wife, Lea. Prosecutors allege she accepted kickbacks and participated in some of her husband's alleged schemes.

A guilty plea and cooperation agreement last August from Michael Kopper, Fastow's once-trusted top aide, helped lead to Fastow. But Fastow's refusal to cooperate has left prosecutors without his help in building cases against other insiders, such as former Enron chief executive Jeffrey Skilling and former chairman Kenneth Lay. Neither Skilling nor Lay has been charged.

The expanded indictment "is a clear indication that Fastow has rejected the government's advances to entice him to join their team," said Robert Mintz, a former federal prosecutor. "He has essentially called their bluff and they have responded by loading up on the charges against him and now adding his wife into the family calculus."